Public sector oil and gas exploration and production company ONGC wants a higher price for natural gas from its deepwater block in the Krishna Godavari basin.

“We have asked the government to offer a higher price for the gas that KG DWN 98/2 can produce. At $4.2 per million British thermal unit, developing the 98/2 block is not viable,” said DK Sarraf, Chairman and Managing Director of ONGC, at the sidelines of the India Investment Summit 2016.

When asked about what would be a viable price, he said, “It depends on the cost estimate. We are still working it out but one thing is sure, at $4.2 per mBtu, the block cannot be developed.”

The company had prepared a field development plan for KG-DWN-98/2, however, the Directorate General of Hydrocarbons had asked for a revision to lower the cost estimate. The work on preparing fresh cost estimates is still on but could be ready in the next 10 days, said Sarraf.

He did not comment on whether the company has written to the government for not revising the gas price lower than $4.2 per mBtu from April 1. Meanwhile, ONGC expects to report strong earnings in the third quarter of fiscal 2015-16.

“Our average realisations are similar to the average Brent crude oil price during the third quarter. It would be either $2-3 per barrel higher or lower as compared to the average Brent during the third quarter,” said Sarraf. Brent crude oil prices averaged at around $44 per barrel during the third quarter of 2015-16.

Speaking at the India Investment Summit 2016, KD Tripathi, Secretary, Ministry for Petroleum and Natural Gas, said that the Centre is working to improve the attractiveness of the oil and gas sector for investors.

He added that the marginal field policy is an example of the ways in which the Ministry is working to attract investors.

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